LONDON (Reuters) - British 10-year government borrowing costs sank below 1 percent on Monday for the first time ever and sterling tumbled to a fresh 31-year low against the dollar as investors bet Britain's vote to leave the EU will trigger a Bank of England rate cut.

Billions of pounds were wiped off the value of British financial stocks, and analysts at several banks slashed their forecasts for the pound in the wake of Britain's vote on Thursday to leave the European Union.

Finance minister George Osborne said on Monday the economy would have to face up to "an adjustment" as it dealt with the fallout of 'Brexit'. Against a backdrop of sliding share prices and an uncertain economic outlook, investors sold sterling and sought the safety of government bonds.

I'm so angry. A generation given everything: Free education, golden pensions, social mobility have voted to strip my generation's future.

Time to make a pot of tea and turn the television off for a while! 🙂

Stop the world im getting off LG x

No matter the outcome, #Brexit polls demonstrate how quickly half of any population can be convinced to vote against itself. Quite a lesson.

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"You'd have expected there to be some psychological barrier to gilts breaking through 1 percent, but not today," said Luke Hickmore, senior investment manager at Aberdeen Asset Management.

"Gilt yields just kept dropping. It's no wonder. There's no political leadership in the UK right when markets need the reassurance of direction," he said.

UK money and bond markets moved to price in lower interest rates, with swaps rates now almost fully implying a 0.25 percentage-point cut from the BoE by the end of the year.

The yield on 10-year UK government bonds tumbled to a new low of 0.934 percent <GB10YT=RR>, and two-year yields fell more than 10 basis points to a four-year low of 0.129 percent <GB2YT=RR>.

Sterling shed more than 3 percent against the dollar to a fresh 31-year low of $1.3221 <GBP=>, and the euro rose more than 2 percent to 83.25 pence <EURGBP=>, its highest in more than two years.

The pound's fall on Friday was the largest in modern history, reaching more than 10 percent against the dollar at one stage, and was also the largest decline since at least the 1970s on a trade-weighted basis.

RELATED : Supporters of 'Brexit' celebrate

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LONDON, ENGLAND - JUNE 24: People react to a regional EU referendum result at the Leave.EU campaign's referendum party at Millbank Tower on June 23, 2016 in London, England. The United Kingdom has gone to the polls to decide whether or not the country wishes to remain within the European Union. After a hard fought campaign from both REMAIN and LEAVE the vote is too close to call. A result on the referendum is expected on Friday morning.(Photo by Jack Taylor/Getty Images)

Paul Nuttall, member of the European parliament, center, reacts to regional European Union (EU) results being announced at the Town Hall in Manchester, U.K., on Friday, June 24, 2016. U.K. referendum results pointed toward a vote to leave the European Union after more than four decades of membership, rocking markets globally and putting a question mark over Prime Minister David Cameron's future in office. Photographer: Simon Dawson/Bloomberg via Getty Images

Leader of the United Kingdom Independence Party (UKIP), Nigel Farage reacts at the Leave.EU referendum party at Millbank Tower in central London on June 24, 2016, as results indicate that it looks likely the UK will leave the European Union (EU).
Top anti-EU campaigner Nigel Farage said he was increasingly confident of victory in Britain's EU referendum on Friday, voicing hope that the result 'brings down' the European Union. / AFP / GEOFF CADDICK (Photo credit should read GEOFF CADDICK/AFP/Getty Images)

Leader of the United Kingdom Independence Party (UKIP), Nigel Farage (C) reacts at the Leave.EU referendum party at Millbank Tower in central London on June 24, 2016, as results indicate that it looks likely the UK will leave the European Union (EU).
Top anti-EU campaigner Nigel Farage said he was increasingly confident of victory in Britain's EU referendum on Friday, voicing hope that the result 'brings down' the European Union. / AFP / GEOFF CADDICK (Photo credit should read GEOFF CADDICK/AFP/Getty Images)

LONDON, ENGLAND - JUNE 23: People react to a regional EU referendum result at the Leave.EU campaign's referendum party at Millbank Tower on June 23, 2016 in London, England. The United Kingdom has gone to the polls to decide whether or not the country wishes to remain within the European Union. After a hard fought campaign from both REMAIN and LEAVE the vote is too close to call. A result on the referendum is expected on Friday morning.(Photo by Jack Taylor/Getty Images)

Nigel Farage (L), Britain's UK Independence Party (UKIP) leader and European Commission President Jean Claude Juncker (R) take part in a plenary session at the European Parliament on the outcome of the "Brexit" summit, in Brussels February 24, 2016. REUTERS/Yves Herman

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RBC Capital Markets now expect the BoE to cut rates by 25 basis points next month to 0.25 percent, and again in August down to 0.1 percent along with an additional 50 billion pounds of quantitative easing bond-buying stimulus. Several banks, including Goldman Sachs and Bank of America Merrill Lynch, cut their sterling forecasts too.

"With the Leave vote creating greater uncertainty over the outlook for the economy and BoE policies biased towards further easing/renewed QE, sterling is vulnerable to further near-term selling pressure," said Athanasios Vamvakidis, FX strategist at BAML.

"A push below $1.30 cannot be ruled out," he added.

Others, like Unicredit, reckon the pound will fall even further, perhaps as low as $1.20.

"The clear risk must be for further downside," said Neil Mellor, a currency strategist at Bank of New York Mellon in London.

"Uncertainty equals currency weakness, we know this, and there is no sense that this (sterling) is a value trade right now and that you have to get back in. It is too early for anyone to start calling a bottom."

Analysts at RBC Capital Markets pointed to the history of past sell-offs as pointing the way towards $1.20-1.25 for the pound by the end of the third quarter of this year.

So far, the fall against the euro and dollar of less than 10 percent is "very small" in the context of historical collapses, they said in a weekend note. "During eight independent price slumps over the last 40 years, sterling has on average fallen 18 percent," they said.